Customs, Excise and Gold Tribunal - Mumbai
Shri Ashok Kumar Bhawarlal Punamiya, ... vs The Additional Collector Of Customs ... on 3 March, 1989
Equivalent citations: 1989(22)ECR179(TRI.-MUMBAI)
ORDER
1. These are five appeals and as the facts and point of law involved in these appeals are common, I propose to dispose them of through a single order.
2. The appellants are licensed Gold Dealers and are engaged in the business of purchase of old gold ornaments which are generally sent to Government of India Mint at Bombay for refining into 24 ct. gold which is further converted into standard gold bars. These appellants after receiving the said gold bars, sell them to other Gold Dealers as well as other persons, who are authorised purchasers of such standard gold bars. These transactions of sale and purchase of gold and gold ornaments are required to be covered by the vouchers duly authenticated by the Gold Control Department. The case of the Department is that the Department had sent summons issued under Section 63 of the Gold (Control) Act, '68 to different persons who are said to have sold their gold ornaments to the appellants; but the said summons were received back undelivered with some remarks by the Postal Department. On the basis of this, and other evidence it was alleged that all the appellants indulged in acquisition of gold ornaments from illicit sources and they are showing the receipts of such gold ornaments as legal purchases from a number of sellers. However, no evidence has been disclosed or discussed about the alleged illicit sources in the impugned order. The Additional Collector of Customs (Preventive) Gold Control, Bombay, ex-parte suspended the Gold Dealers licences held by the appellants in exercise of powers vested under Section 50 (1) of the Gold (Control) Act, 1968. Since the order of suspension of Gold Dealer's licence was not revoked on the expiry of initial period of 10 days from the date of suspension of Licences, the appellants have preferred these appeals against the impugned order of suspension with the prayer that the impugned orders of suspension be declared as null and void having no legal force on expiry of 10 days.
3. During the course of personal hearing, Shri D. H. Shah, Advocate, explained the case as above.
4. The impugned orders are assailed by the appellants mainly on four grounds which are summarised in nutshell as under:
(a) One Gold Dealer of Bombay M/s. R. Kishan & Co. challenged the legality and validity of the identical order of Suspension of Gold Dealer's Licence (passed by the Additional Collector of Customs along with the present appellants in these appeals) before the Division Bench of the Bombay High Court and the Hon'ble High Court has granted a stay against the operation of the said order of suspension in Writ-Petition No. 122 of 1989. Since the point of law and facts are identical in the said Writ Petition and the Present appeals, the impugned orders be set aside.
(b) The Additional Collector of Customs (Preventive) Bombay has no power, authority and jurisdiction to suspend the Gold Dealer's Licence under Section 50(1) of the Act.
(c) In the alternative of ground (b) hereinabove, it was submitted that an ex-parte order of suspension of Gold Dealer's Licence gets automatically revoked on expiry of 10 days from the date of the suspension unless the 'reasonable opportunity1 to disprove the charges levelled against the delinquents is granted within 10 days and;
(d) The Gold Control Department has not given the opportunity to produce the customers as statutorily required under Section 100 (2) of the Gold (Control) Act and hence no adverse inference and presumption about the acquisition of gold is legally permissibly as per Section 100 (3) of the Act against the Gold Dealers.
5. In support of the first contention, a copy of the order of the Hon'ble High Court of Bombay is placed on record of this appeal proceeding by the appellants and the contention of the appellants is correct that the order of suspension of Gold Dealer's Licence is stayed. I am duty bound to take this fact in favour of the appellants while considering these five appeals.
6. In support of the Second contention that the impugned order is passed without jurisdiction, the appellants have relied upon the Order No. 1236/85-WRB dated Nil October 1985 in the matter of Naginkumar Jagada v. Collector of Customs & Central Excise, Rajkot. The West Regional Bench of the Appellate Tribunal has observed in paragraph 29 of the said order as under:
Suffice if we observe that, that part of the order of the Additional Collector by which he cancelled the goldsmith certificatdis wholly without the jurisdiction. The power of cancellation or suspension of a licence or certificate is conferred on the administrator under Sub-section (5) of Section 4 of the Act....
In view of the above observation on the point of jurisdiction by the Appellate Tribunal, it is submitted by the appellants that the impugned orders of Suspension are ex-facie without jurisdiction and hence they are void. The impugned orders are passed by the Additional Collector of Customs (Preventive) Bombay.
7. The Appellants also submitted that in S.O. 4304 dated 2.12.1968 as amended from time to time, the Gold Control Administrator has delegated his powers vested in him under Sub-section (1) & (1A) of Section 50 to the persons of and above the rank of the Officers of the Assistant Collector of Central Excise only. It is apparent that wherever the administrator wanted to delegate his powers to the officers of the Customs Department, it was specifically stated so in the said statutory order passed under Sub-section (4) of Section 4 of the Gold (Control) Act. It is therefore pleaded that the Additional Collector of Customs (Prev.) Gold Control who has passed the impugned orders are not competant to exercise the powers of the Additional Collector of Central Excise unless and untill the administrator delegates his powers to him by issuing a suitable Notification in this behalf.
8. Since the observation about the jurisdiction of the Additional Collector in the matter of passing the order of suspension or cancellation of Gold Dealer's Licence is of the apex Appellate Authority, the same cannot be ignored by the lower tribunal like Collector (Appeals) but the same is having binding effect.
9. Regarding the third contention, the factual position is very clear and undisputed from the available records of the Department itself. The orders of suspension are passed and communicated to the appellants without giving any opportunity of showing cause to the appellants. This action has been taken under Section 50 (1) of the Gold (Control) Act. The impugned orders of suspension do not specify in the order the precise duration for which the said suspension of Gold Dealer's Licence is ordered. This inherent infirmity in the impugned orders is fatal to the validity of the impugned orders.
10. The said impugned orders of suspension do not state in the order that the appellants would be given a "reasonable opportunity of showing cause against the proposed action" within 10 days from the date of ex-parte order of suspension of Gold Dealer's Licence. The proposed action, against all the appellants, which appear to have been contemplated by the lower authority, was to suspend their Licences till the completion of enquiry or trial and in that case the condition precedent is to grant the "reasonable opportunity" before passing of the order of suspension. In these cases, the orders of suspension for indefinite period were passed first and the show cause notices were issued for the 'proposed action' later on. This is totally illegal and wrong.
11. The impugned orders do not state that the suspension of Gold Dealer's Licence are ordered "pending completion of any inquiry or trial" against them. From the plain reading of the said suspension orders, it gives an unambiguous impression that the orders of suspension of Gold Dealer's Licence are not for 10 days but for an indefinite period.
12. The Appellants made a written representation to the Additional Collector and asked for a personal hearing within 10 days from the date of the order of suspension. The Appellants also demanded inspection of the documents referred to and relied upon in the impugned orders of suspension of Gold Dealer's Licence. The appellants also demanded the copies of the evidence referred and relied upon in the impugned orders of suspension. The appellants submitted that neither inspection of the documents was given nor copies of the evidence was supplied to them nor hearing was granted within 10 days. The appellants therefore rightly submitted that they were denied opportunity to make effective and meaningful representation in defence to the authority and thus the impugned orders are violative of principles of natural justice.
13. It is not stated in the show cause notices given to the appellants that the inquiry against them is yet incomplete and that the criminal complaint, if any, in the court against the appellants is pending. The appellants submitted that no criminal complaints have been filed against them so far by the Department. The impugned orders of suspension are therefore clearly in contravention of mandatory provisions of Section 50 (1) of the Gold (Control) Act.
14. Under Section 50(1) read with the proviso, licence or certificate can be suspended only pending completion of any inquiry or trial against the holder of such licence or certificate and the said period of suspension shall not exceed ten (10) days unless a reasonable opportunity has been given to the holder to show cause against the proposed action. The impugned orders of suspension do not make any mention about the proposed action in the body of the order.
15. The Additional Collector seems to be of the opinion that once the show cause notices have been given within 10 days from the date of suspension of Gold Dealer's Licence the statutory and mandatory requirement as prescribed in proviso to Section 50 (1) of the Gold (Control) Act about giving of "a reasonable opportunity to show cause" is complied with. He also seems to be of the opinion that after getting the reply to the show cause notice from the delinquent Gold Dealers the final decision can be taken at any lime without any time limit because the main Section 50(1) does not provide when the inquiry or trial should commence and be concluded. The Additional Collector also seems to be of the opinion that granting of an opportunity to produce the evidence in defence and granting of an opportunity of being heard is not included in the phrase "reasonable opportunity" used in proviso to Section 50 (1) of the Gold (Control) Act. The lower authority is not correct in interpreting the provisions of Section 50 (1) in such manner.
16. The phrase "reasonable opportunity of showing cause against the proposed action" has been used in proviso to Section 50 (1). The phrase "reasonable opportunity" has been defined by the Supreme Court in its judgment in the matter of Khemchand v. Union of India as under:
(a) an opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges levelled against him are and the allegations on which such charges are based;
(b) an opportunity to make his representation as to why the proposed punishment should not be inflicted on him, which he can only do if the competent authority after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the government servant tentatively proposes to inflict one of the three punishments and communicates the same to the government servant.
17. The Madhya Pradesh High Court in the case of Madhumilan Syntex Pvt. Ltd. v. Union of India has explained the phrase "reasonable opportunity" in the following terms:
A Show cause notice, as of necessity, envisages somthing more than a mere notice, it is not an empty formality. Where the law requires giving of a Show cause notice, it postulates the opportunity of showing cause to be adequate. It is not merely enabling a party to make a mere representation; is not the same thing as giving of an opportunity of showing cause. The expression "showing cause" connotes an opportunity of leading evidence in support of one's allegation and contraverting the charge or allegations as are made against the person called upon to show cause. A mere opportunity of submitting an explanation is not enough. Showing cause inherently involves an opportunity to lead evidence in rebuttal of the material on which the proposed action is based which contemplates an opportunity of cross-examination as well.
18. In the instant cases, the Additional Collector has issued show-cause-notices within 10 days from the date of suspension of Gold Dealer's Licence to all the appellants. However, applying the ratio laid down by the Supreme Court and Madhya Pradesh High Court as stated earlier, merely giving of show cause notice and affording an opportunity to submit the explanation is not enough to fulfill the statutory requirement of giving a reasonable opportunity of showing cause. The Appellants must be given an opportunity to produce evidence in defence and to rebut the allegations levelled against them within 10 days, if the proposed action is to be taken first and prior to giving of a reasonable opportunity to the delinquents. This statutory requirement is not fulfilled in all these cases and hence all the impugned orders are liable to be set aside.
19. By exercising the power under proviso to Section 50 (1), the competent authority can throw the holder of a licence or certificate out of his business maximum for a period of 10 days only prior to giving them a reasonable opportunity of showing cause to the proposed action. If the "reasonable opportunity" as explained by the Supreme Court and Madhya Pradesh High Court in the cases cited above is not given within 10 days, the order of suspension of Licence gets automatically revoked on the 11th day. The impugned orders have been passed by the Additional Collector under proviso clause to Section 50(1) of the Gold (Control) Act. It is a fact that the Additional Collector has not given personal hearing and reasonable opportunity to the appellants in real sense of the term to rebut the allegations within 10 days from the date of suspension of Gold Dealers' Licences. In the circumstances, I hold that the impugned orders of suspension became inoperative, null and void. Since the impugned orders are null and void, I cannot remand the said matters for de novo considerations or for afresh adjudication.
20. It is also the grievance of the appellants that inspite of their demand for inspection of the documents referred to and relied upon in the impugned order, the Department has not afforded them an opportunity to inspect them. It is also the grievance of the appellants that they have not been supplied the copies of the evidence referred in the suspension order. In the absence of availability of evidence the lower authority wants the appellants to defend themselves.
The Adjudicating Authority should have considered that natural justice is not an empty procedural formality. When the Department does not supply the copies of the evidence or inspection of the documents referred to and relied upon in a proceeding against them, one fails to understand how the Additional Collector can come to the conclusion that the 'reasonable opportunity' has been given to the delinquent licence holder. The abrupt stoppage of one's running business results in grave repercussions. Parliament in its wisdom has provided in-built safeguards in Section 50 of the Act. Rigorous punishment should be awarded with due care and circumspection.
21. It is a matter of basic importance to all quasi-judicial matters, that all the parties, who are likely to be affected by the proposed action, are given a written show cause notice in compliance of principles of natural justice. The final order of adjudication pursuant to such show cause notice is not passed without giving an opportunity to produce the evidence in defence and without giving an opportunity of being heard in person. In these cases, the Additional Collector has extended the order of suspension for more than 10 days without giving an opportunity of being heard in person and opportunity of producing evidence in defence, even though the appellants had expressly asked for personal hearing. Appellants have stated that the suspension orders have not been expressly lifted so far.
22. The provisions of Section 53 about the disposal of gold and gold ornaments is applicable where the period of validity of any licence issued to a Dealer has expired or where any application for the renewal of such licence has been rejected or where such licence or a certificate granted to a goldsmith has been cancelled but the said provision is not made applicable in the matter of suspension of Licence. The Gold Dealer cannot sell and otherwise transfer and deal with the gold and gold ornaments lying as stock-in-trade. Such being the legal but unusual position, the section requires the authority to exercise his power with judicial consciousness of the consequences arising out of the impugned orders of suspension of gold Dealer's Licences.
23. The Department has not given any opportunity to the appellants to produce their customer who have said to have sold gold ornaments to them as required under Sub-section (1) of Section 100 of the Gold (Control) Act to prove the genuineness of their transactions. The Hon'ble High Court of Bombay has also stated in their judgment in Criminal Application No. 2240/88 that it was in the interest of justice that the Department must give such an opportunity to the dealer before any action for the purported illegal acquisition of gold is taken against the Gold Dealer. Instead of complying with the observation of the High Court, the lower authority has suspended the Licence.
24. Since the impugned order was passed under proviso to Section 50(1) of the Act for an uncertain and indefinite period, the same is contrary to law. The mere issue of the show cause notice for the proposed action to continue the suspension order pending completion of the inquiry does not permit in law to continue the suspension of the Gold Dealer's Licence for more than 10 days. If it was the intention of the authority to suspend the Licence till the completion of the enquiry or trial then he ought not to have passed the suspension order first and issued the show cause notice later on. In this case 'proposed action' is taken against the appellants before issue of show cause notice.
25. Under the Scheme of the Gold (Control) Act, the inquiry is conducted under Section 63 of the Gold (Control) Act, in connection with any contraventions of any provision of the Act. The gazetted Gold Control Officers are empowered to hold such inquiry. The power of adjudication is derived under Section 78 of the Gold (Control) Act. The competent Gold Control Officer is empowered to suspend the licence only 'pending completion of inquiry' for the purpose of suspension of Gold Dealer's Licence. There is no averment either in the impugned order or in the show cause notice that the Department has yet to complete the inquiry. There is no averment in the suspension order that any criminal complaint has been filed against the appellants in respect of the alleged offence. The arrest of the partners or proprietor of the appellant firms does not amount to launching a criminal trial. In the circumstances, the order of suspension for more than 10 days becomes null and void.
26. My attention has been drawn to a Circular dated 8th January 1971 bearing F. No. F. 2/10/69-GC. II issued by Govt. of India and addressed to all the Collectors in the matter of suspension and cancellation of Gold Dealer's Licence. Govt. of India has stated in the said circular that officers of the rank of Collector only should take such drastic action of ordering suspension and cancellation of Licence. The impugned orders have been passed by the Additional Collector of Customs (Preventive), Bombay. However, for the time being I am not going into the issue of jurisdiction.
27. In view of the discussion above, I find the orders of the Additional Collector of Customs (Preventive) Bombay, are not sustainable in law and the same are set aside.